That's a really thoughtful post with some sage advice.
As a fellow LT shareholder, consider it's actually time to step back over the weekend and (finally) feel really positive about the investment into STX. I've been somewhat surprised at the number of comments yesterday expressing disappointment around ONE day's SP movement.
A good time to recall the famous quote from the patriarch of value investing, Ben Graham:
"In the short run the market is a voting machine but in the long run it is a weighing machine".
When a number of posters mentioned the market didn't like yesterday's announcement, you should take out the word 'market' and replace with 'traders'. It's clear that traders, with little knowledge of the Waitsia analogue were playing off whether another 'staggering' was in the headline.
As a LT holder I thought the announcement was very positive. Practically speaking it potentially points to WE2 having an even greater resource than we had before the well penetrated the HC. The three discoveries will all add to the 'weighing' machine, however, the full value extent of these weights will take a little bit of time to be truly measurable.
My sense is we are going to get a really good heads-up from the Company presentation at the Good Oil Conference next week. Then we have flow tests later this month and at some time beyond that we will have the first contingent resource for WE2. In parallel we hopefully have the final de-risking of a fully tested/cased/completed well.
While the voting machine is more emotionally charged and subjectively based, over the next 2-3 months as hard data together with Company plans for WE2 and the Perth Basin (other 100% owned permits) are revealed I'd expect the market to re-align to the more objective weighing machine.
Ultimately for WE2 the metrics/valuation is relatively straightforward. Rexsh and others have put forward plenty of comparitive economics against the likes of Waitsia (AWE). You really only need to plug in an estimate of net gas resource to STX from WE2. For example you could put in 500Bcf or 750 Bcf or 1Tcf - different values come out of course but at least you have a reference point for when updated numbers are put out in the future. At the moment guessing this number for the combined Basal Wagina + Kingia + Highcliff is a pin the tail on the donkey exercise, however, we may get some deeper insight into the Company's thinking as early as the Good Oil presentation.
Then for STX holders you should consider what additional value you want to ascribe to the 'new fairway' outside of WE2 and then finally Jaws.
It's all IMO here but my sense of value is well north of where the voting machine was yesterday hence I'm at the very least a medium term holder going forward.
I recall Pokermoe posted part of a quote from SN to Energy News Bulletin yesterday. For all those who were a little rattled by the voting machine yesterday it could be helpful to read the expanded quote:
"This is a huge outcome for the Strike-Warrego joint venture and we'll now sit back and look (at) ways to appraise the discovery. From there Strike also has a 100% owned acreage to the south and it's prospective for the three plays discovered here...
This is the beginning of potentially multi-billion dollar company with Strike having the recipe for success with both the geophysical and geological conditions required for propsective Wagina, Kingia High Cliff targets to be drilled successfully...
Short term holders and traders may be expecting Strike/Warrego to be ex-news now with the final High Cliff announcement out and drilling finished...
However there are several additional key pieces of information, flow tests and resource bookings to come. This continues to be a very exciting period for the company''.
That's why I'm really bullish that the weighing machine should put on plenty of kilos in coming months.
Relax, enjoy the WE2 success to date and have a great weekend.
Cheers
Adaltiora
STX Price at posting:
24.0¢ Sentiment: Buy Disclosure: Held
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